For employers operating their group health plans on a calendar year basis, now is the time of the year to prepare for open enrollment with respect to group health and welfare benefits.  Typically, the focus is on evaluating the services and performance of vendors, renewing rates and considering design changes.  In addition to these items, it is important for employers to address various legal requirements.

Inflation Adjustments in Annual Limits

Several annual limits apply to health and flex plans which may be adjusted each year for changes in the cost-of-living.  The new amounts should be considered upon renewal.

2018 2019
Maximum Annual Out-of-Pocket for Non-Grandfathered Health Plans (non-HDHPs)

Individual

Family

 

$7,350

$14,700

 

$7,900

$15,800

Maximum Annual Out-of-Pocket (for HDHPs)

Individual

Family

 

$6,650

$13,300

 

$6,750

$13,500

Minimum Deductible for HDHPs

Individual

Family

 

$1,350

$2,700

 

$1,350

$2,700

Maximum Annual HSA Contribution

Individual

Family

Age 55 Catch-up

 

$3,450

$6,900*

$1,000

 

$3,500

$7,000

$1,000

Maximum Medical FSA Employee Pre-Tax Contributions $2,650 $2,650**
*Updated by the IRS (Rev.Proc.218-18)
** The IRS has not yet announced the health FSA limit for 2019 plan years

The above limits are all required to be followed except in the case of the medical FSA limit which is optional (employers can set a lower limit).  There are a couple of items to highlight concerning the maximum out-of-pocket limit for non-grandfathered health plans.  First, the limit can be divided so a portion applies to the medical benefit and a portion applies to the prescription drug benefit.  This may be needed if the plan has separate medical and prescription drug administrators.  Second, if a plan has a family maximum out-of-pocket that is greater than the individual maximum out-of-pocket, there must be an embedded individual maximum out-of-pocket within the family limit so that no individual is subject to a maximum out-of-pocket greater than the individual amount.  For an HDHP, however, the embedded maximum out-of-pocket can’t be less than the minimum family deductible for HDHPs.

Preventive Care Benefits

Non-grandfathered plans must cover certain preventive care benefits at 100% with no participant cost-sharing.  The list of required preventive care is updated periodically.  Employer group health plans must include any new items by no later than the beginning of the first day of the plan year starting one year after any new guidelines or recommendations are issued.  For example, employer group health plans operating on a calendar year must offer the following new preventive care items with no participant cost-sharing as of January 1, 2018:

  • Statins for certain older individuals with at least one risk factor for cardiovascular disease and related screenings for cardiac risk factors.
  • Aspirin for certain older individuals to prevent cardiovascular disease and colorectal cancer.
  • Expanded cervical cancer screenings in more situations to align with USPSTF guidelines.
  • Extension of certain well women services to adolescents.

Historically, one of the required preventive care services to be offered at no cost to female participants has been contraceptive drugs and supplies.  Recent guidance allows almost any nongovernmental employer to decline to offer contraceptives (or just a subset such as emergency contraceptives) due to the employer’s religious beliefs or moral convictions.

Annual Participant Notices

As you prepare the open enrollment materials do not forget about the required participant notices which must be furnished annually.

  • Notice of Grandfathered Status. Plans that were in effect prior to the enactment of the ACA in 2010 are exempt from some of the insurance market reforms as long as they retain “grandfathered plan” status (that is, plans that have existed without major changes to their provisions since March 23, 2010, the date of the ACA’s enactment).  If your plan is still grandfathered, notice of grandfathered status must be included in SPDs and other plan materials such as annual open enrollment materials.
  • Summary of Benefits and Coverage. The SBC is intended to provide information in a prescribed format to participants so they can easily compare the information to other plans for which they may be eligible, including coverage on the exchange.  A template SBC is available on the DOL website.  The template has been revised and plans are required to use the new template beginning with open enrollment periods starting on or after April 1, 2017.
  • Women’s Health and Cancer Rights Act. Each year participants must receive a summary of a health plan’s coverage for mastectomies and breast reconstructive services.
  • Medicare Part D Notice of Creditable or Non-Creditable Coverage. This annual notice must be provided before October 15th to any participant who is eligible for Medicare Part D prescription drug coverage along with any qualified beneficiaries. This includes COBRA participants, retirees and their dependents and Medicare-eligible employees and their dependents.  Since it is difficult for most employers to determine who should receive the notice, providing the notice to all employees facilitates compliance.
  • HIPAA Notice of Privacy Practices. Enrolled employees must be notified at least once every three years that they may request a new copy of the HIPAA notice of privacy practices.  Alternatively, the notice can be reissued at least once every three years.  An easy way to comply with this requirement is to notify participants annually, at open enrollment, that they may request a new copy of the notice at any time, free of charge, by contacting Human Resources.
  • Children’s Health Insurance Program (CHIP) Notice. Most states provide premium assistance subsidies under Medicaid or CHIP to help low-income individuals pay for employer coverage.  The CHIP notice explains the subsidies.  Employees who are eligible for employer health coverage must be provided with the CHIP notice annually if the employer maintains a group health in a state that provides premium assistance subsidies under Medicaid or CHIP.  The CHIP notice is updated twice a year, and before distributing the notice, employers should check the DOL website for any revisions.
  • ACA Section 1557 Nondiscrimination Notice. Self-funded employer group health plans that are subject to the nondiscrimination requirements of Section 1557 of the ACA (typically, health care providers) must include a nondiscrimination notice and taglines in 15 foreign languages in significant communications and publications, such as annual open enrollment materials and SPDs.
  • If the employer offers a wellness program which is subject to the HIPAA/ACA wellness program rules and/or the ADA/GINA wellness program rules, there are participant notice requirements which must be satisfied annually, as well as when the wellness program is first rolled out.

Please contact VCG’s Vantage for more information and assistance with Annual Enrollment.